We all sympathise with the restaurant owner who prepares for a packed night only to have their customers “no-show” for their reservations. There is planning and purchasing that goes into ensuring you are ready for a specific amount of people and this is undoubtedly an expensive and frustrating thing to happen. In many instances, the restaurant’s response, particularly among the high-end establishments, has been to charge deposits or take credit card details in advance, to limit the number of people not showing up. But is this the right way to handle it?
In a recent study by Zonal, only 32% of all customers were found to be happy with the idea of paying a deposit or handing over credit card details, this means that asking for a deposit is likely to offend 68% of all potential customers.
Charging deposits in advance or taking credit card details and charging a fine if people don’t show up, creates a “negative incentive” for customers. If they don’t do what they say they will, they get punished. Of these solutions, the deposit is actually a worse system as it pre-punishes people by treating them as if they have already not shown up and never truly recovers the goodwill of the customer when they get that money back at the meal.
There are very few customer-centric industries where using a negative incentive when dealing with customers is the first port of call. Usually, businesses want to create a warm and pleasant feeling within their customers and the negative incentive does exactly the opposite. Warm feelings are created in customers through positive incentives, where customers are rewarded for good behaviour and loyalty. Various examples include loyalty cards, free shipping, or exclusive access to certain new products. Could restaurants make use of positive incentives to reduce no-shows? For instance, would offering a free drink to those who arrive on time, encourage a culture in which this is done?
To answer that, we would need to understand why people don’t show up to begin with.
Why are people not showing up?
The first thing we need to establish is that apart from a minuscule minority of bad-faith actors, the vast majority of people make their bookings assuming they are going to honour them. These people are generally booking for a reason – they want to go out to that restaurant and they want to be sure of a seat when they do. They are likely excited, and even looking forward to making the trip.
From there, there are a series of reasons why people might not show up, none of which is simply “naughty customers sometimes don’t come and thus deserve to be punished”.
Bad Reputation
It is distinctly possible that the customer booked at a restaurant and then was alerted by a family member that the restaurant has bad reviews online, or hears a story where someone got bad service and simply decides to go elsewhere.
This is a challenging scenario for the restaurant owner as firstly the circumstances cause people to feel less obligation to cancel when they go elsewhere. The main challenge though is that the problem is not the no-showing customer, but rather the way the business is being run in general. A high number of no-shows is a clear indication that something is going wrong with service, food quality or any number of other issues.
Is the customer to blame, or are all those one-star reviews the real reason? Fixing online reviews, and building a good reputation is a great way to ensure customers are way too excited to be booked at a restaurant to give up on their booking easily.
Emergency or bad planning
Some customers have booked and are looking forward to their meals, when, for whatever reason, life steps in and prevents this from happening. Perhaps a treasured relative missed a flight and the celebration is now on hold or maybe they became double-booked by a last-minute work conference call?
In the majority of these instances, much of the harm can be undone to the restaurant simply by making it easy for the customer to cancel their booking. A simple call to the customer on the morning of the booking will take care of the vast majority of potential no-shows. Better than this is making use of the range of proven apps, and telephonic messaging services that allow for a single-touch cancellation, so busy and potentially shy people find it easy to back out without human interaction even after that morning call.
It’s easy when under stress to forget to call a restaurant to cancel, but if an alert comes up with a simple cancel button, very few in these circumstances would hesitate to press it.
Taking a lesson from other industries, restaurant owners should consider the easy and cheap option of developing a personal app that goes even further.
Imagine if, instead of simply cancelling, the app instead offered alternative booking times, perhaps when the restaurant is usually quiet? Instead of losing the customer because Aunt Mabel missed her flight, the restaurant will now know immediately when she misses it, open up the table in plenty of time for other guests, and then rebook that family for the following night once she is in the city.
Maybe the app also allows customers to mark special occasions, the dates of which the owner can now incentivise them to book on through free offers or exclusive invites.
The beautiful thing about operating an app of their own is that asking clients to download an app is far kinder than asking them to pay a deposit, and when it comes with loyalty-boosting benefits to the customer, it may even stay on their phones long after what would have been a one-night only event. The best part is that it also allows restaurant owners to gather data on their serial no-shows, and ultimately block them from booking without harming those genuine customers who were going to honour their bookings.
Casual big-city attitude
Statistics from overseas have revealed that in big cities as many as 20% of those who have booked may not show up. This is a disgracefully high number, but it does hint at one other solution. If restaurant managers are able to track the number of people who typically no-show at their restaurant then, like the airlines industry, they can overbook their restaurant by that same amount. Once again this solution works, because it ensures there are no empty tables, while also not presuming each customer is a criminal intent on scamming the restaurant.
Other lessonsÂ
There is a new system that is taking off overseas in which meals are pre-ticketed. Like with theatre, a ticket is sold in advance allowing the customer access to the restaurant and their meal. For all intents and purposes this is a deposit system, but by simply reframing the language one can avoid the negative connotations that come with asking for deposits.
Alternatively, restaurants could stop bookings completely. Without a booking, there can be no, no-show. Of course, bookings were instituted because even with no-shows, they allowed a better sense of how many people were going to arrive on a given night and allowed larger tables of people to be assured of their seats. On the plus side, if there are no bookings then people know they can arrive on the night and, if they are prepared to queue, will eventually get in.
Conclusion
At the end of the day, charging good, well-intentioned customers a deposit to bring you their custom is not good for a small business. It creates a negative association with your brand, harms your relationship with new customers before they walk through the door, and loses you business. Reframing the idea of deposits, using positive incentives, and putting in systems that take no-show numbers and reasoning into account are far more effective at building goodwill, and developing a successful business.
